On July 29, 2014, the National Labor Relations Board (NLRB) ruled that McDonald’s, which for over a year and a half has been the target of protesting workers and lawsuits over low wages and questionable labor practices, is considered to be a co- employer along with the owner of the franchise.
In the run-up to the ruling, McDonald’s has been maintaining that it cannot be held liable for employment decisions of its franchisees about the pay and working conditions in its individual franchises. Now, the company is no longer shielded from charges of illegal employment practices pending at NLRB regional offices.
In “How McDonald’s Ruling Impacts The Franchise Industry,” Noel King, writing for Marketplace.org, says the decision that could have implications for the millions of Americans who work for franchises.
As the only full-service point of sale provider — from software development to franchise incubator to ongoing support — part of Sintel’s commitment to our customers and business community is to share relevant ideas, information and industry news.
Here are the highlights of the Marketplace.org post:
– The NRLB ruling comes after investigating claims that some McDonald’s restaurants broke labor laws by firing or penalizing workers who took part in pro-labor activities.
– If the owner of a McDonald’s fast food franchise commits a labor violation, the McDonald’s corporation can be held jointly liable for the franchisee’s bad behavior.
– At this time, the decision affects only the McDonald’s corporation and McDonald’s franchises. Marketplace.org notes that, according to the International Franchise Association (IFA), there are 3,000 other brands with franchise operations in the U.S., employing 8.5 million people across a range of industries.
– In the post, the IFA’s Matthew Haller says the decision could destroy the franchise industry. “Franchises may bear the names of big companies but they are owned and run like small businesses,” Haller says. “They set the wages, they hire and fire the employees, determine the appropriate benefits for employees and are responsible for all decisions that take place at the employee level.”
– The NLRB’s general counsel said the McDonald’s Corporation exercises enough control over how franchises are run to make it a co-employer of the people who work for franchises.
– “They do exercise quite a bit of control over their franchisees in order to protect their brand,” said Wilma Liebman, a former chair of the NLRB, quoted in the post.
– McDonald’s will contest the NLRB decision. Meanwhile, other franchisees in other companies and industries will be watching closely.
Read the full Marketplace.org post here.
For more insights into the dynamics between franchises, franchisees and labor, check out our related posts, Seattle’s Fast Tracked Franchisees Are Fit To Be Tied, and Private Sector Job Growth Fueled By Franchises.
As the only full-service provider — from software development to franchise incubator to ongoing support — part of Sintel’s commitment to our customers and industry is to share ideas and information. Whether you’re a first-time franchise hopeful, a small business owner or an established chain, it’s always smart to stay on top of the latest news in labor issues to achieve financial success.
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